US tariffs threaten Indonesia’s cotton-linked textile exports, job cuts feared

Indonesia’s textile industry is bracing for major disruption as the US prepares to impose a 32 per cent tariff on Indonesian goods, with textiles and apparel 40 per cent of which are exported to the US expected to be among the hardest hit. A 90-day suspension granted for bilateral negotiations has temporarily lowered the tariff to 10 per cent, but industry players warn that the sector could face accelerated layoffs once the grace period ends.

The move follows US President Donald Trump's April 2 announcement targeting trade-surplus countries, including Indonesia, which recorded a $16.8 billion surplus with the US last year. While China faces a 125 percent basic tariff, Indonesia’s goods are under threat of the 32 per cent hike if no resolution is reached.

Textile associations are proposing an increase in import of raw materials such as US cotton to rebalance trade and potentially reduce the tariff impact. They also suggest protecting domestic markets by curbing textile imports.

However, short-term diversification of export markets is seen as unviable due to limited demand and stiff competition abroad. The tariff threat looms large over a sector already grappling with challenges before the policy shift.